Milliman, Inc., a consulting and actuarial firm, released the latest update to the Milliman 100 Pension Funding Index.
In July, pensions experienced asset increases of USD31 billion and liability increases of roughly USD46 billion, resulting in a USD15 billion decrease in funded status. The decline reduced funded status to 75.4% — down less than a percentage point from last month — based on USD992 billion in assets and a projected benefit obligation of USD1.316 trillion.
“Based on asset activity it seems like July should have been a good month,” says John Ehrhardt, co-author of the Milliman 100 Pension Funding Index. “But instead we’re losing ground because of declining interest rates. At this pace, getting back to a mere 80% funded status by the end of the year is going to require both favorable interest rate movement and better than 20% return on assets. Over the last 12 months, the cumulative asset return has been -10.85% and the funded status has fallen by USD333 billion. For these 12 months, the funded ratio of the Milliman 100 companies has fallen from 100.8% to 75.4%.
To view the complete monthly update, please click here.
L.D.